Bank stocks and the credit crunch

Discussion in 'Stocks' started by hughb, Mar 9, 2008.

  1. hughb


    I've been keeping an eye on bank stocks since July of last year when this mess really started coming to a head. At the end of each trading week I count up the total number of bank stocks that made a new 52 week low on any day that week. I count S&L's with the banks, BTW.

    For the week ending 07/27/07 the Dow was down 585 points and I couinted up 311 bank stocks that made new lows. (this was the highest number I've noticed)

    For the week ending 11/09/07 the Dow was down 552 points and I counted up 249 bank stocks that made new lows.

    For the week ending 01/04/08 the Dow was down 565 points and I counted up 211 bank stocks that made new lows.

    For the week ending 02/08/08 the Dow was down 561 points and there was only 44 banks stocks that made a new low that week.

    I don't follow any of the banking indexes out there, so maybe these totals correlate with them, maybe they don't. I just prefer to look at it in the aggregate by each individual stock.

    Anyway, this seems to imply that some of the panic is subsiding.

    Just an FYI, this week with the Dow down 372 points, I counted 125 banks that hit a new low.
  2. I think your conclusion may be flawed. For one, why not have a banking index chart against the S&P rather than new lows for the week ending. Secondly, if the stock market goes down, it could be considered as good news for banks which may benefit from a lowered fed funds rate.

    I guess if we want to get more theoretical, banks should benefit from significant stock market declines as debt would be the preferred financing over equity.:confused:
  3. hughb


    Now I am actually starting to notice banks in the new 52 week high list. Last week I noticed 11 banks that hit a new high.
  4. hughb


    Private equity firms like banks now, according to the WSJ.
  5. downey savings----

    was funny several weeks ago, i was at the ritz in laguna and met a banker from dsl playing hoops dn by the beach....and boy o boy was he upbeat about the general health of the company and its exposure to siv's and cmo's......LOL
  6. hughb


    Last week I counted up 227 banks that made new lows. Not good.
  7. hughb


    UMB Financial Corp, (UMBF), is a bank that's bucking the trend. I visited their website and it looks like they do residential home mortgages, so it's suprising that their stock would be doing so well.

    Bank stocks are such sluggards that I don't like to buy them. I have to think about making an exception here.
  8. hughb


    So this week there were 293 banks that made new lows, we are basically back to where we were in July of last year when this thing boiled over. I never would have predicted that this would go on as long as it has. Even Freddie and Fannie may need help to get through this.

    BTW, the Bank of the United States failed in 1930, right in the middle of the 29 - 33 bear market. I'm sure many thought that when they failed it must have been a bottom too.

    A few banks bucking the trend are MASB, FFIN, BNCL, HCBK, and UMBF
  9. piezoe


    Thanks for interesting data, Hughb. Those banks that have bucked the trend don't interest me on the long side in the least . I am interested in good, mid-cap banks that have been hammered. The ones that should survive but whose shares have dropped into the dirt. In other words, I want to buy the worst performers in terms of stock price, but those with sound balance sheets, or at least nothing they can't handle. That is where the maximum value lies in my opinion.

    All financial institutions are going to be hit hard by this recession. And that includes those that have somehow managed to buck the trend so far. In my opinion, if you buy those, you are playing with fire . Either they stop going up, or more likely, they start to fall, and you're in at the top. I prefer to get off the elevator on the ground floor and take the escalator up.

    P.S. You may have provided us with an outstanding list of candidates for shorting, once the technicals indicate it's time. I'll be watching them closely.
  10. piezoe


    Oops, I should have said that if i'm long I prefer to ride the escalator up rather than the elevator down. If short, it's the other way round of course.
    #10     Jul 13, 2008